Rescinded [2009-10-01] - Policy on Deposits

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1. Effective date

The present document contains the entire text of the policy as revised July 1, 1995. It cancels sections 10.7.1 to 10.7.6 of Guide on Financial Administration for Departments and Agencies of the Government of Canada, consolidated revision, April 1991.

2. Policy objective

To safeguard the government's money and to reduce the government's need to borrow.

3. Policy statement

It is the government's policy to ensure that public money it receives is promptly deposited to prevent and reduce, to the extent possible, instances of error, fraud, or omission and to decrease the need to borrow.

4. Application

This policy applies to all organizations considered to be departments under section 2 of the Financial Administration Act.

5. Policy requirements

  1. All public money must be deposited in the Consolidated Revenue Fund (CRF) as soon as possible, but as a minimum within the time frame and as specified in the Receipt and Deposit of Public Money Regulations.
  2. All public money collected or received must be deposited in an account at a financial institution, other deposit facility or other designated financial agent that the Receiver General has established for that purpose. See Appendix A for information on electronic deposits.
  3. Every person who collects or receives public money must also maintain a record of all receipts and deposits as set out in the above regulation
  4. Money received must be paid into the Consolidated Revenue Fund before any repayment is made as set out in the Repayment of Receipts Regulations.
  5. All public money, including money awaiting deposit, must be safeguarded at all times.
  6. Receipt of counterfeit money must be reported to the police immediately. Departments must then promptly set up or reinstate an account receivable, if they can identify the person who passed the counterfeit money; otherwise, they must write it off as a loss of money.
  7. Cash shortages are normally the responsibility of the employees. The shortage should be recovered from the responsible employee, in accordance with the Financial Administration Act, subsection 76(4) or section 78. The cash shortages must be reported, investigated and accounted for, as outlined in Chapter 4-7, Policy on Losses of Money and Offences and Other Illegal Acts Against the Crown.
  8. Unidentifiable cash overages must be deposited, recorded in the departmental accounts as an overage, and credited to a miscellaneous non-tax revenue account. If the overage can be identified with a particular payment, it should be treated as an overpayment and refunded in accordance with the Repayment of Receipts Regulations.
  9. Departments must follow the requirements set out in Appendix B when handling security deposits from contractors following a request for tender. Certified cheques received as security deposit for purposes other than with a tender for a contract must be deposited immediately in the Consolidated Revenue Fund.

6. Procedural requirements

6.1 Funds received by mail

  1. Departments must ensure that the procedures used when the mail is opened and that the contents of the daily register of receipts meet the minimum financial requirements outlined in the handbook entitled Mail Management in Government Departments and Agencies, published by the National Archives of Canada.
  2. Two people must be present when mail is opened and receipts must be recorded immediately.
  3. All cheques and other negotiable instruments received must be promptly endorsed, "For Deposit to the Account of the Receiver General for Canada".

6.2 Safeguarding public funds

The Senior Financial Officer must ensure that arrangements for safeguarding and transporting sums of money meet the safekeeping standards administered by the departmental security officer and that there is a clear delineation of responsibilities and assignment of accountability.

6.3 Receipts from financial institutions

Departments must obtain and retain deposit receipts provided by financial institutions at the time of the deposit.

6.4 Post-dated cheques

Departments must maintain effective control of all post-dated cheques. Control procedures must include: recording details of the cheques at the time of receipt; storing the cheques in a secure place until they are deposited; noting the date the cheque can be deposited on the accounts receivable records; and using a follow-up system to ensure that post-dated cheques are always deposited on the date of the cheque.

6.5 Reconciliation of deposits

Departments must ensure that their records of deposits are reconciled to the cash receipts reported to the Bank of Canada. Refer to Receiver General Directive 1986-8, "Electronic Deposit of Public Money to the Credit of the Receiver General for Canada" for details.

6.6 Dishonoured cheques

When a cheque that was deposited in the CRF is dishonoured, the department that made the deposit must promptly set up or reinstate an account receivable and request the drawer of the dishonoured cheque to either have this cheque certified or replace it with a valid cheque.

6.6 Dishonoured cheques

Departments must have systems that ensure the physical security of public money held during and after working hours and that incorporate adequate methods of control, including accountability and internal controls. See Appendix A for guidelines.

7. Monitoring

  1. Departments must ensure that their deposit activities are effective and efficient.
  2. Departments should undertake periodic reviews and audits of their deposit activities to ensure that they are established and operated in accordance with this policy.
  3. The Treasury Board Secretariat will monitor the effectiveness of this policy by reviewing departmental monitoring reports on audit and performance.

8. References

8.1 Authority

This policy is issued pursuant to the Financial Administration Act.

8.2 Relevant legislation

Financial Administration Act (R.S.C., 1985, Chapter F-11) sections 2, 17, 17.1, 17(3), 20, 76(4) and 78.

Receipt and Deposit of Public Money Regulations, C.R.C., c. 728, as amended by SORs/80-449, 83-828 and 94-402.

Repayment of Receipts Regulations, C.R.C., c. 729, as amended by SOR/81-920 and SOR/93-258.

Part VI, Government Contract Regulations, P.C. 1987-1355, June 30, 1987 (SOR/87-402, as amended by SOR/91-651 and SOR/92-503).

8.3 Treasury Board Secretariat publications

Policy on Recording Receipts and Accounts Receivables, chapter 3-2, "Comptrollership" volume of the Treasury Board Manual.

Policy on Losses of Money and Offences and Other Illegal Acts Against the Crown, chapter 4-7, "Comptrollership" volume of the Treasury Board Manual.

8.4 Other publications

Receiver General Directive 1986-8, Electronic Deposit of Public Money to the Credit of the Receiver General for Canada.

Receiver General Directive 1987-7, Acceptance of Credit Cards as a Means of Receiving Payment for Government Goods and Services.

Receiver General Directive 1995-2, Details Required on Cheques Received for Deposit to the Credit of the Receiver General for Canada.

National Archives of Canada; Mail Management in Government Departments and Agencies, Records Management Series, 1979.

Order in Council P.C. 1970-300, February 17, 1970.

9. Enquiries

Please direct enquiries about this policy to your departmental headquarters. For interpretation of this policy, departmental headquarters should contact:

On general policy issues

Financial Management Policy Division

Financial and Contract Management Sector
Financial and Information Management Branch
Treasury Board of Canada, Secretariat
Ottawa, Ontario
K1A 0R5

Telephone: (613) 957-7233
Facsimile: (613) 952-9613

On procedures for deposit of public money

Director, Banking Arrangements Directorate
Banking and Cash Management Sector
Public Works and Government Services Canada
8A1
Place du Portage, Phase III
11 Laurier Street
Hull, Québec
K1A 0S5

Telephone: (819) 956-2945
Facsimile: (819) 956-7595

Appendix A - Guidelines

1. Definition: security deposits from contractors following a request for tender

Following a request for tender, contractors' security deposits consist of: certified cheques, government-guaranteed bonds (including Government of Canada Treasury Bills) and surety bonds from acceptable bonding companies approved by the Treasury Board.

2. Electronic deposits

Departments may accept payments made by clients using electronic fund transfer (EFT). The Receiver General is also offering departments electronic draft capture of debit and credit cards at the point of sale. These systems offer savings in administrative costs and, in certain instances, will accelerate the inflow of funds to the Consolidated Revenue Fund, thereby reducing the government's interest expenses.

3. Physical security

Controls for physical security normally include as a minimum: limiting the availability of keys; requiring the combined actions of two people for access to safes, vaults, and cash registers; and designing procedures for:

  • promptly recording and depositing funds (large value deposits should be made before 2 p.m. Ottawa time);
  • counting and signing off when sums of money change hands;
  • arrangements for changing routes to the bank and varying times of deposit;
  • making frequent deposits to minimize the sum of money on hand;
  • using night-deposit service to avoid keeping large sums of money on the premises overnight; and
  • using armoured-car services when warranted by the value of cash included in the deposit.

Appendix B - Policy Requirements for Security Deposits from Contractors following a Request for Tender

1. Security deposits - general

  1. All certified cheques and government-guaranteed bonds, submitted as security deposits must be recorded in the accounting records of the department and in the Public Accounts of Canada as both assets and liabilities, regardless of whether they are held by the department or deposited in the Consolidated Revenue Fund.
  2. The department must store in a secure place uncashed cheques and bonds submitted as security, in accordance with Part VI of the Government Contract Regulations or, where the department does not have adequate facilities, with the Security Deposit Division of Public Works and Government Services Canada.

2. Certified cheques

  1. A certified cheque submitted as a security deposit with a tender for a contract must be held uncashed until the successful bid is selected or for up to one year, whichever occurs first.
  2. When a tender is accepted and the certified cheque is then required as security until completion of the contract, the cheque must be deposited in the Consolidated Revenue Fund, unless the contractor asks the department not to cash the cheque.
  3. Any uncashed certified cheque must be replaced by a valid certified cheque before it becomes out-of-date; a cheque is usually out-of-date six months after the date of the cheque.
  4. When a tender is rejected, or accepted and the certified cheque submitted with the tender is not required as security until completion of the contract, the cheque must be returned to the contractor.

3. Interests on security deposits

  1. Simple interest must be paid on all security deposits deposited to the Consolidated Revenue Fund. If the term of the deposit is less than 12 months, interest must be paid when the security deposit is returned to the contractor. Otherwise, the interest must be paid annually on the anniversary date of receipt of the security deposit or at the end of the fiscal year, whichever method departments find easier to administer. Accrued interest that remains unpaid at year-end is subject to the Policy on Payables at Year-End (PAYE) (see Chapter 5-5). Interest must not be paid on cheques that are held and not cashed or where the contractor has tendered a surety bond or pledged a security or other form of performance instrument that is simply held in trust.
  2. Interest must be calculated according to rates published monthly by the Department of Finance and, pursuant to Order in Council P.C. 1970-300 of February 17, 1970. - The interest rate to be paid is equal to 90 percent of the simple arithmetic mean of the accepted weekly three-month Treasury Bill tender rates for the month immediately preceding the month for which interest is paid.
  3. Interest paid on security deposits is a statutory expenditure and is recoverable from the Public Debt Section, Financial Services Division, Department of Finance. Departments and agencies preparing and submitting journal vouchers to recover such interest expenses must provide pertinent information to substantiate the interest payment.